Effect Of Human Capital Development On Inclusive Growth In Nigeria

Abstract

Human capital development plays a critical role in driving sustainable and inclusive economic growth by enhancing productivity, innovation, and workforce efficiency. In Nigeria, despite various policies aimed at improving education, healthcare, and skills acquisition, the country continues to face challenges in achieving broad-based economic growth that benefits all segments of society. This study investigates the effect of human capital development on inclusive growth in Nigeria from 1985 to 2023, analysed key indicators such as education, healthcare, and labour force participation. Secondary data sourced from the World Development indicators of World Bank and statistical bulletin of the Central Bank of Nigeria, the study applies the Vector Error Correction Model (VECM) to examine both short-run and long-run relationships between inclusive growth (IGRT) and explanatory variables, including gross fixed capital formation (GFC), labour force participation (LAB), secondary school enrollment (SES), and life expectancy (LEX) to proxy human capital development. Findings revealed that human capital development significantly influences inclusive growth in Nigeria. Secondary school enrollment (SES) and life expectancy (LEX) show a negative relationship with inclusive growth in the long run with (β= -0.063, p0.05) respectively, This weak connection might point to structural issues, such as a mismatch between increased life expectancy and the economic systems' capacity to accommodate and benefit from a healthier population. Labour force participation (LAB), on the other hand, shows a positive and significant relationship with inclusive growth with (β= -0.76, p<0.05). The study concludes that sustained investment in human capital through education, healthcare, and skill development is essential for fostering inclusive growth in Nigeria. Policymakers should integrate vocational training with formal education to enhance workforce skills. Expanding affordable healthcare and tackling key health issues, like maternal and child mortality, will boost productivity and inclusivity.